Lending to fall as banks avoid risky borrowers

MANILA, Philippines - Lending is expected to decline dramatically this year since banks will shy away from risky borrowers as effects of the global crisis deepen in developing countries, the Bangko Sentral ng Pilipinas (BSP) said. Lending – which helps boost business expansion and fuel economic activity – would decelerate to 10 percent, reversing a 20.5 percent growth posted in 2008. Nevertheless, BSP Governor Amando M. Tetangco Jr. said that bank lending has continued at a “relatively healthy" pace. An economic slowdown will adversely affect beneficiaries of overseas Filipino workers and corporations, he said. “We’re looking at [a growth of] about 10 percent. Credit growth is going to continue but at a slower rate," Tetangco said. Loan officers polled by the BSP indicated stricter lending standards in collateral requirements and credit screening. However, the BSP said this was an expected reaction as banks are wary against default that will drag their balance sheets. “Individually, local banks have taken logical defensive action by being more cautious in lending and boosting their liquidity levels," Tetangco said. “The risk is that this could result in less credit for productive purposes, which would add to the pressure on the real economy players." - GMANews.TV